Govt May Cut Subsidy on Non-Urea Fertilizers.

New Delhi: The government is considering substantially reducing the subsidy it offers on non-urea fertilizers, an official with direct knowledge of the matter said on condition of anonymity.

While the numbers are still being worked out, it was likely that the subsidy on di-ammonium phosphate (DAP) could be reduced by as much as Rs 4,500 per tonne and on muriate of potash (MoP), it could be brought down by Rs 500 per tonne, the official said. The figures for the other fertilizer categories are still being worked out. A final decision on the matter could be taken by 17 January, the official said.

Currently, the government offers a subsidy of Rs 19,763 per tonne on DAP and Rs 16,054 a tonne on MoP. India imports almost half of its requirement of DAP and almost all its requirement of MoP.

An official of the Fertiliser Association of India (FAI), an industry lobby group, said that while the government had not consulted the industry, the latter was aware of an imminent cut in subsidy.

Retail prices of both DAP and MoP were freed in April 2010, but the government still offers a subsidy to fertilizer firms to keep prices down. Prices of both products have risen sharply after they were freed.

The government will make the prevailing retail prices of these fertilizers the benchmark and formulate subsidy levels accordingly, the official said.

Source : livemint.com